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This research reports on the similarities and distinctive differences between informal social networks in China (Guanxi) and Korea (Yongo). Within an analytical framework derived from social capital and institutional theory, the structural forms and characteristics of both network forms are compared. Although we observe some similarities, surprisingly, the two networks show several fundamental differences. Both are society-spanning constructs, developed and maintained by reciprocal action that creates trust and trustworthiness, and serves as a major factor in network cohesion. Both networks are relatively closed or inaccessible to outsiders, with insiders able to connect other insiders to each other (i.e., internal bridging of structural holes). However, Guanxi can be characterized as being utilitarian (purpose-based), whereas Yongo in principle describes cause-based ties. Furthermore, Guanxi networks are somewhat accessible to outsiders and draw on a diverse base of ties; Yongo networks are predefined, partly by birth, and are hence homogeneous and highly exclusive. Guanxi networks can benefit from spillover effects through bridging different networks; Yongo networks often cannot, as there is antipathy, competition, and potentially hostility between certain types of networks. The results add knowledge to social network theory in general and in particular on informal social networks in East Asia.

Informal networking can be seen as a positive activity with beneficial outcomes for individuals, firms, and society as a whole, but informal networking can also lead to collusion, cliques, nepotism, and other forms of unethical or corrupt conduct – largely related to research on emerging markets. To date, the construction of informal networks and their cultural intertwinement and development have not been a focus of international management and organization studies, a gap that this special issue seeks to address. This special issue contributes to a better understanding of the dynamics of informal networks and their ambivalence, in which the same networks have different modes of operation and have positive and negative sides intermittently or simultaneously. We demonstrate the context in which informal networks operate, highlight their complexity, and encourage dialogue among scholars studying informal networks in a variety of countries. Using a context-based and comparative perspective allows us to conceptualize informal networks in a more integrated and balanced way. Understanding the workings of informal networking – known variously as guanxi, yongo, jentinho, wasta, and blat – in culturally specific settings, places Western values, social structures, and ideals of behavior in perspective and tests Western-centered assumptions, narratives, and theories. Because informal networking is a conventional way of conducting business in many countries, as depicted in this special issue, defining the bright (positive) and the dark (negative) sides of informal networks is critical for responsible management and business success at multinational corporations.

The paper unpacks the "black box" of informal institutions and theorize about the role of informal networks in channeling continuity and change in informal institutions. Specifically, we argue that when informal institutions are enacted by informal networks that are "relatively affective" and "relatively closed," their persistence is higher than the persistence of informal institutions that are enacted by "relatively open" and "relatively instrumental" networks.